The Wall Street Journal reported Monday that Goldman Sachs’ directors have already begun discussing replacing CEO David Solomon, even as the company reports strong performance. The report says the board has talked about elevating president John Waldron to CEO as early as next year, with Solomon taking on the role of executive chairman.
The timing is odd because Goldman is the top pure-play investment bank right now. The bank advised on more than $1 trillion in merger deals in the first half of the year and generated more than $12 billion in equities revenue. Those records make the succession talk feel premature.
The plan would be one of the “smoother and more deliberate” leadership handovers seen on Wall Street, according to Wells Fargo banking analyst Mike Mayo. But there is a key risk: Solomon may not want to step down, and Waldron may not want to wait.
Solomon’s Track Record
Goldman named Solomon its CEO in 2018, following the bank’s failed attempt at consumer banking. The Trump administration and the AI boom drove a rebound in deal-making, and he used that momentum to restore the firm’s fortunes. Today, Goldman presents a straightforward narrative for shareholders.
According to Mayo’s calculations, Goldman shares have climbed more than 300% since Solomon took over, ranking it second only to JPMorgan Chase CEO Jamie Dimon, who has run his firm for nearly 21 years, among KBW Bank Index comparisons.
“It’s just very hard for a person like that to decide they are really going to retire,” said retired University of Delaware law professor Charles Elson. “Being 65 years old today is like being 55 was 30 years ago.”
Elson pointed out that Solomon serves as chairman of Goldman’s board and exercises significant sway over the group. That weight means it would be difficult to force him out.
Waldron’s Background
Goldman’s president and chief operating officer is Waldron, and he has reportedly been eyed for top posts at alternative asset managers Apollo and Carlyle.
Goldman handed Waldron a retention package worth $80 million that runs through 2030, to hold on to him. Still, a wealthy rival could come after Waldron, said Elson. There is “no definitive timeline for succession” at the bank, said Goldman spokesman Tony Fratto. Succession planning is something bank boards commonly cover across the near, medium and longer term.
The Tension Between Them
There’s no pressing need for Solomon to tell everyone he’s stepping down within a year. If he does announce it ahead of time, his power inside the bank gets smaller, per Elson. Yet if Solomon chooses to stay on as CEO because he thinks the AI boom is still in its early stages, Waldron may lose patience for waiting on the throne.
“There will always be tension in a set up like that,” Elson said. “It’s like Prince Charles waiting for his mother to die. You can’t set your own priorities, because there’s someone else in charge.”
Governance Risk
A specialist in CEO handovers pointed out that Yale School of Management’s Jeffrey Sonnenfeld, said it would be bad governance if Goldman’s board was attempting to “drive out a high performing CEO like David Solomon.”, which is a reasonable observation. Solomon has produced record results.
Waldron’s Patience
Goldman’s presumed successor, Waldron, has reportedly been talking with Apollo and Carlyle about leadership positions there. The firm has put a $80 million retention package together to hold him back. That figure does not bind his will, though, so if a more attractive offer comes along, Goldman could still lose him.
What the Board Faces
Goldman’s board has several options, each with its own cost:
- Keep Solomon as CEO and let Waldron wait indefinitely
- Elevate Waldron now and move Solomon to executive chairman
- Force Solomon to step down sooner than he wants
- Watch Waldron leave for Apollo or Carlyle
Succession planning is not an easy choice, and the board has spent time considering it. A vote on the plan could come from the bank’s board in the months ahead.
A Difficult Handover
According to Mayo, the transfer would rank among the smoother ones seen on Wall Street. Yet smooth does not mean simple. Solomon has held power for years, and relinquishing it is rarely easy.
Goldman is stuck in a situation much like Prince Charles’, according to Elson’s comparison. The successor waits while the incumbent cannot set his own agenda, which is the bind the bank finds itself in.
Business at the bank is going well, but the board still has to work out who runs it.
It is ironic that Goldman finds itself in its strongest position in years, with the succession question being the single issue that could interrupt that streak. The board has the figures to support whatever choice it makes, yet it cannot afford to waste time.
Source material: “Goldman Sachs CEO succession planning faces one big problem,” CNBC.
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